Articles

REFLECTIONS ON LAKE: The State of the Right to Privacy in Minnesota

Marshall H. Tanick
(email)
Mansfield, Tanick & Cohen, P.A.
1700 U. S. Bank Plaza South
Minneapolis, MN 55402
Tel: 612.339.4295
FAX: 612.339.3161

Two years ago this past July, Minnesota joined 47 other jurisdictions in this country in recognizing the right of privacy. On July 30, 1998, in the landmark case of Lake v. Wal-Mart Stores, Inc., 581 N.W.2d 231 (Minn. 1998), the Minnesota Supreme Court adopted an individual right of privacy, a doctrine recognized by statute or common law in all of other states in the nation except lone holdouts North Dakota and Wyoming.

The decision in Lake actually articulated three separate prongs of privacy rights for Minnesotans: intrusion against seclusion (a form of trespass); publication of true but embarrassing facts (a communications variant of the tort of defamation); and misappropriation of identity (which has overtones of copyright and trademark elements).

The two years that have passed since the Lake ruling are hardly sufficient to fully appreciate the evolution of the new tort, which was recognized in Minnesota more than 100 years after the doctrine of privacy law was first articulated in a landmark law review article.¹ But enough time has passed to gauge how Lake is flowing.

While both praise and criticism were heaped upon the Lake decision, most observers expected it to create reverberations in Minnesota jurisprudence. To the dismay of some and surprise of many, there has not been much reported case law in Minnesota concerning the right of privacy since the Lake ruling. The jurisprudential focus on privacy has shifted to the federal courts in Minnesota, rather than the state court system.

The paucity of reported case law in Minnesota regarding the right of privacy since Lake is explicable for several reasons. The two years since the ruling was issued is insufficient time for cases to navigate through the Court of Appeals or Supreme Court for purposes of reported decisions, or even unreported ones.

Privacy claims are, to be sure, being asserted with increasing frequency, but they have often been litigation appendages, which have been dismissed without significantly impacting other claims in the lawsuits. Additionally, many issues remain unresolved in the wake of the two-year-old right of privacy ruling, including the statute of limitations, the availability of punitive damages, insurance coverage, among other matters.

Nevertheless, the two-year anniversary of the Lake ruling provides an opportune occasion to review legal developments in this jurisdiction concerning privacy law.

LAKE LOSES

The legacy of the Lake case revolves around the ruling of the Supreme Court, which overturned two decades of Minnesota jurisprudence by recognizing the right of privacy. But it began - and ended - at the trial court level.

The case arose out of a vacation in Mexico by three young women from northwestern Minnesota. One of them took a photograph of the other two naked in a shower together. The photograph was on one of several rolls of film that were taken to be developed at the Wal-Mart store and photo lab in Dilworth, a town adjoining Moorhead.

Wal-Mart returned these developed photographs along with a notation saying that one or more of them were not printed because of the "nature," presumably referring to the nudity. Nevertheless, the women later heard that the photograph had been developed and had been disseminated throughout the community.

They sued Wal-Mart for invasion of privacy, a claim that the Clay County District Court was dismissed, based on Minnesota precedent, for failure to state a claim. The Minnesota Court of Appeals grudgingly affirmed, feeling obliged to follow Minnesota precedent despite its view that there was no "articulate reason why Minnesota should not recognize this cause of action."² The Supreme Court reversed, in a 5-2 decision written by Chief Justice Kathleen Blatz, lauding the right of privacy as an "integral part of our humanity."³ A dissenting decision, joined by two justices, preferred to "leave to the legislature" the resolution of privacy interests, rather than through creation of any common law rights.⁴

The Lake case then went to trial last fall, more than one year after the Supreme Court ruling. A Clay County jury found that the women's right to privacy had been invaded, but also determined that the action by the Wal-Mart employees was outside of the scope of the course of their work and, therefore, the employer was not liable for the intrusion. Accordingly, no damages were awarded.

So ended the Lake saga.

LAKE'S LEGACY

Since Lake, the Minnesota Court of Appeals had passed upon only one significant privacy-related decision as of Spring 2000. In Summers v. R & D Agency, Inc., 593 N.W.2d 241 (Minn. App. 1999), the court ruled that the right of privacy recognized in Lake is retroactive. The case involved a claim by an employee against his employer, its workers compensation insurer, and a private investigator hired by the insurer, alleging that their surveillance activities obstructed his receipt of workers compensation benefits in violation of Minn. Stat. &#sect; 176.82.

The claimant lost on his statutory claims because he had received all of the benefits to which he was entitled and, therefore, could not claim obstruction of benefits. The court also ruled that his claim under the Minnesota Criminal Harassment Statute, Minn. Stat. &#sect; 609.749, does not provide a private cause of action.

But the court ruled that the employee had a viable invasion of privacy claim because of the harassing telephone calls, surveillance of family members, and trespassing he suffered while defendants investigated whether he was cooperating with his workers compensation rehabilitation plan. The Court of Appeals held that the privacy claim, which arose a year before the Lake ruling, was retroactive, reasoning that "persons whose privacy rights have been violated would suffer an injustice," if Lake was not applied retroactively.⁵ To avert this injustice, the court felt the Lake ruling must be available to any litigant, even if the intrusion occurred before Lake was decided.

FEDERAL FOCUS

Despite the underpinning of Lake in Minnesota state law, privacy-related cases have been more pronounced in the federal system since the Lake ruling. Many of the cases have arisen under federal statutes laden with privacy overtones, although the common law undercurrent of Lake has also been felt.

No less a party than Wal-Mart was the defendant in another privacy-related case decided by the federal court for the District of Minnesota. In C.L.D. v. Wal-Mart Stores, Inc., 79 F.Supp. 2d 1080 (D. Minn. 1999), Judge John Tunheim rejected a lawsuit asserting claims of privacy, estoppel, and violation of the Minnesota Human Rights Act by a Mankato Wal-Mart employee who alleged that one of her supervisors improperly disclosed her pregnancy and abortion to her coworkers. All of the claims faltered because of the woman's failure to allege "sufficiently widespread publication" of the confidential data. The decision suggests that the quantum of intrusion must be evaluated by the court as a legal matter rather than determined by the trier-of-fact.

The disinclination of the courts to find a breach of privacy for conduct that is, as in C.L.D., intrusive but not seriously damaging was reinforced by the Minnesota court of Appeals in Lawrence Walker v. Minnesota Mining & Manufacturing Company d/b/a 3M Employee Development Corporation, 2000 WL 520254 (Minn. App. May 2, 2000) (unpublished). An employee who was injured at work sued his employer on a variety of claims, including invasion of privacy because his workers compensation case manager obtained his medical records, shared that data with the employee's boss, and accompanied the employee to his medical appointments. The court deemed the caseworker's conduct "petty and totally unworthy of a professional." But the misconduct was not actionable because it fell short of the type of intrusion in Lake. The court pointed out that the law cannot "fashion and enforce remedies for callous, boorish, or petty behaviors."

While this decision may distress some claimants, courts do not necessarily reflect antipathy to privacy concerns, as reflected in the ruling of the 8th circuit Court of Appeals in Cossette v. Minnesota Power & Light, 188 F.3d 964 (8th Cir. 1999). In Cossett, as in C.L.D., the gravamen was the wrongful disclosure of medical information about an employee, both to her coworkers and to her prospective employer, which resulted in her being turned down for a new position. The supervisor informed a prospective employer, without the employee's authorization, that the employee had suffered a back injury and also had lifting restrictions, which also had been previously disclosed to the employee's coworkers. The supervisor had reasons for both of the disclosures. He informed the prospective employer about the employee's medical conditions for his "own greedy purposes," to assure that she would not get a job so that he would not lose her as an employee. He told the employee's coworkers about her limitations in order to avoid adversely affecting their morale if their schedules would have to be changed to accommodate her restrictions.

Both rationales were insufficient to ward off a claim of breach of privacy under the Americans with Disabilities Act (ADA). The catch was that the employee was allowed to assert an ADA claim, even though she was not disabled. Despite the back injury, which she suffered away form work, the employee was able to perform her job and was not considered to have a disability, within the meaning of the ADA, for which reasonable accommodation was necessary. However, the court held that liability could be grounded on the provision of the Act that prohibits unauthorized disclosure of "confidential medical records[s]."⁶ Following precedents of the 9th and 10th circuits, the court held that a claimant "need not be disabled" to assert a claim for unauthorized gathering or disclosure of confidential medical information under the act.⁷

Privacy rights have also been recognized for business entities, as well as individuals, by the 8th Circuit in Campaign for Family Farms v. Glickman, 200 F.3d 1180 (8th Cir.2000). The case was brought by a handful of individual pork producers, together with a loose collection of producers and related organizations. They sought to block the disclosure by the Department of Agriculture of the identities of some 19,000 family farmers, including about 2,000 in Minnesota, who signed a petition seeking a referendum to convert a federally imposed mandatory assessment on pork producers for research and marketing to a voluntary system. They asserted that the dissemination of their identities to the public violated the exemption in the Federal Freedom of Information Act (FOIA), commonly known as the Personal Privacy Provision, which bars disclosure of data which would constitute a "clearly unwarranted invasion of personal privacy."⁸ This claim, asserted in the so-called reverse of FOIA case, was that disclosure of the petition revealing the identity of those who declared their positions on the controversial issue of dismantling the mandatory system could expose them to retaliation or harassment within the pork producing industry. Judge Tunheim issued a preliminary injunction prohibiting disclosure of the petition and identities of its signatories. The 8th circuit agreed, going even further and holding that the "personal privacy" exemption applies as a matter of law. Therefore, the Department of Agriculture was permanently forbidden from disclosing the identities of the petitioners.

To reach its conclusion, the appellate court had to overcome several obstacles. One hurdle was the Department of Agriculture's assertion that the individual signatories had limited privacy interests because they were "acting in their business capacities," rather than in a "personal" capacity. This characterization led the Department to conclude that the farmers who signed the petition had minimal privacy interests at stake because they would not suffer any "likely consequences" if their identities were disclosed.

But the 8th Circuit disagreed with both of these propositions. It eschewed an "overly technical distinction" between individuals acting in "private" and "entrepreneurial" capacities. Regardless of the capacity in which the individuals sold pork, whether as a sole proprietor or in corporate format, disclosure would reveal their identities and, possibly, subject them to rebuke. Applying a balancing test required by the FOIA, the court found that the signatories had sufficient stake in maintaining the privacy of their identities to avoid vitiating their "interest in the secret ballot," a concern the Court deemed of "paramount importance to our system of voting." Even though their identities might be known to other signatories, they did not "waive their privacy interests" because they did not knowingly consent to the widespread publication of their participation in the petition.

The Department's claimed justification for disclosure to assure "oversight" of the pork assessment process was deemed "slender" because only pork producers were concerned whether the financial contributions were voluntary or compulsory, and no one else "much cared" about what system was used. Accordingly, the court concluded that the balancing test can "only come out one way," in favor of maintaining the privacy of the names of the petition signatories, and terminally barred disclosure of their identities.

The Campaign for Family Farms case is reflective of the growing recognition of privacy rights of business interests in both state and federal courts in Minnesota. The Minnesota Court of Appeals has, on at least three occasions, upheld themes relating to breach of confidentiality of business information since Lake was decided. Although none of those cases turn on the common law right of privacy articulated in Lake, they all reflect fidelity to the principle of privacy articulated in Lake.⁹

Federal courts have been equally responsive to business concerns protecting privacy interests. For instance, the 8th Circuit, in Madsen v. Lease, 195 F.3d 988 (8th Cir. 1999), held that a claim for violation of trade secrets is not dischargeable in bankruptcy. It also affirmed a $688,000 judgment for compensatory damages, coupled with a $4 million punitive damage award, for fraudulent misappropriation of the trade secrets of an insurance agency in S & W Agency v. Foremost Insurance Co., 187 F.3d (8th Cir. 1999).¹⁰

In highly publicized and controversial litigation earlier this year, U.S. District Court Judge Donovan Frank ordered labor union members to produce their home computers in connection with a labor strike at Northwest Airlines. In Northwest Airlines, Inc. v. Local 2000, International Brotherhood of Teamsters, Civ. No. 00-08 (D. Minn. Feb. 2, 2000), the court directed that the computer hard drives be furnished to a neutral third party to itemize their contents for a determination of which data may be discoverable in connection with the airline's claim of an illegal work stoppage.

The airline contended it needed the data to ascertain any "concerted" action by union members to advance a "sick-out" by flight attendants that hobbled air traffic around the end-of-year holidays. Privacy advocates expressed concern over the intrusive nature of the discovery of off-work activities and equipment and its potential for surveillance of personal data unrelated to the issues. The court order, modeled after a proposal by the employees, included protocols to maximize confidentiality of information, including matters related to "union collective bargaining strategies and negotiation positions." The dispute was finally resolved this spring by a new collective bargaining agreement.

These cases reflect the ferment that continues to roil the waters as Lake's legacy evolves. Whether relying upon principles expressed directly in Lake or not, the jurisprudence in Minnesota is flowing in favor of privacy interests and is likely to continue to do so as Lake continues its course.

October 2000 / BENCH & BAR

Click here to go to Privacy Law.

NOTES

1. See S. Warren and L. Brandeis, "The Right of Privacy," 4 Harv. L. Rev. 193 (1890).

2. Lake v. Wal-Mart 566 N.W.2d 376, 378 (Minn. App. 1997).

3. 581 N.W.2d 231, at 235.

4. 581 N.W.2d 231, at 236-37.

5. Summer v. R & D Agency, Inc., 593 N.W.2d 241, at 246 (Minn. App. 1999).

6. 42 U.S.C. &#sect; 12112(d)(3).

7. Cossette v. Minnesota Power & Light, 188 F.3d 964, at 969 (8th Cir. 1999).

8. 5 U.S.C. &#sect; 552(b)(6).

9. See e.g. World Data Products, Inc., v. Keefe, 1999 WL 1037992 (Minn. App. 1999) (unpublished)(restraining order affirmed for misappropriation of confidential consumer information); Hagen v. Burmeister & Associates, Inc., 1999 WL 31130 (Minn. App. 1999) (unpublished)(common law respondeat superior applied to claim of violation of Uniform Trade Secrets Act); K Sun corp. v. Heller Investments, Inc., 1998 WL 422182 (Minn. App. 1998) (unpublished)(affirming finding of misappropriation of trade secrets during negotiation of possible business merger.)

10. But see LEXIS NEXIS v. Beer, 41 F. Supp. 2d 930 (D. Minn. 1999) (Doty, J.)(no trade secrets where "confidential documents" were mailed by plaintiff after lawsuit began, and also rejecting the trade secret claim as an impermissible "back door" to a proper noncompete clause.